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2 Contents Introduction... 1 Part one Legislative and industrial framework Public Service Act and subordinate legislation Ongoing APS employees Non-ongoing APS employees Additional requirements relating to Senior Executive Service employees Review of termination of employment decisions Reduction in classification Fair Work Act Unfair dismissal Notice of termination Payment of accrued entitlements Notifying Centrelink and employee associations General protections Other relevant Commonwealth laws Industrial instruments Superannuation... 7 Part two Terminating the employment of an ongoing APS employee Public Service Act requirements Grounds for termination under Public Service Act Fair Work Act provisions Specific grounds for termination excess to requirements (s.29(3)(a)) Management of excess staff situations Australian Public Service Bargaining Framework Fair Work Act Redeployment of an excess employee - movement of an excess employee between agencies Restrictions on engagement of redundancy benefit recipients Agency-specific arrangements Dealing with employees who are not fit for and not at work Specific grounds for termination lack of, or loss, of an essential qualification for performing duties (s.29(3)(b)) Specific grounds for termination non-performance, or unsatisfactory performance of duties (s.29(3)(c)) Non-performance of duties Unsatisfactory performance of duties Non-performance or underperformance of duties due to injury, illness or disability Specific grounds for termination inability to perform duties because of physical or mental incapacity (s.29(3)(d)) Fair Work Act Disability Discrimination Act Superannuation issues Specific grounds for termination failure to satisfactorily complete an entry-level training course (s.29(3)(e)) ii

3 2.8 Specific grounds for termination failure to meet a condition of engagement (s.29(3)(f)) Specific grounds for termination Breach of the APS Code of Conduct (s.29(3)(g)) Part three - Terminating the employment of a non-ongoing APS employee Public Service Act provisions Superannuation issues Review of termination decisions Fair Work Act provisions Unfair dismissal General protections Notice of termination Application of National Employment Standards redundancy pay provisions to non-ongoing employees Advising Centrelink and Unions Compensation for early termination Appendix A: Fair Work Act provisions further information Appendix B: Compensation for early termination of non-ongoing APS employees engaged for a specified term Appendix C: Amounts to be included in payment in lieu of notice iii

4 Introduction This guide provides Australian Public Service (APS) agencies with information on issues relating to the termination of employment of APS employees. Termination of employment is a serious matter and the power to terminate employment under the Public Service Act 1999 (PS Act) is subject to a number of checks and balances. It is important that agencies are aware of the framework governing termination of employment and exercise relevant administrative powers consistent with the framework and with the APS Values. This guide provides advice relating to: the different grounds of termination set out in section 29 of the PS Act; and the legal requirements governing termination of employment, particularly those applying under both the PS Act and the Fair Work Act 2009 (FW Act). It also touches on the requirements of administrative law, anti-discrimination laws, superannuation law and industrial instruments. As the law regulating termination of employment is complex and subject, amongst other things, to the jurisdiction of Fair Work Australia, agencies are encouraged to establish appropriate mechanisms to inform themselves of any legislative changes and developments in case law. There are other APS publications that should be read in conjunction with this guide, depending on the nature of the termination decision. For example, there are more extensive guides that deal with: Senior Executive Service termination decisions see arrangements relating to probation see other conditions of engagement see and handling misconduct see 1

5 Part one Legislative and industrial framework This part outlines the legislative and industrial framework relating to terminating the employment of an APS employee under section 29 of the Public Service Act 1999 (PS Act). Under the PS Act, agency heads have all the rights, duties and powers of an employer. Their decisions must, of course, comply with the requirements of the PS Act and the various instruments issued under the Act including the Public Service Regulations 1999 (PS Regulations) and the Public Service Commissioner's Directions (the Directions). Employment decisions must also take account of the requirements of the Fair Work Act 2009, administrative and other Commonwealth law, and the common law of employment. The PS Act allows an agency head to delegate to another person many of the agency head s powers or functions under the Act. Any delegation of these powers by the agency head must be in writing. A reference in this guide to the agency head can also mean their delegate. The PS Act is interpreted and applied by all APS agencies. It is therefore important that the Australian Public Service Commission (the Commission) be kept fully informed of current legal thinking on the interpretation of the Act so that this can inform the advice provided by the Commission to agencies. Agencies are therefore requested to liaise with the Commission when obtaining advice and forward copies of any legal advice that they obtain regarding the PS Act framework to the Commission, in line with Clause 10 of the Legal Services Directions. These should be forwarded to: Legal Services Unit Australian Public Service Commission 16 Furzer Street PHILLIP ACT 2606 Agencies are also asked to ensure that the Commission is notified of any court or Fair Work Australia proceedings that raise interpretation of the PS Act framework. The initial point of contact for such cases is the Group Manager of the Employment Policy Group on (02) Public Service Act and subordinate legislation Under section 29(1) of the PS Act, an agency head (or delegate) may, by notice in writing, terminate the employment of an APS employee in the agency 1. Any decision to terminate the employment of an APS employee must be consistent with the requirements of the PS Act, including the requirement to uphold the APS Values (as set out in section 10(1) of the PS Act) and the requirements set out in the Directions. There are a range of provisions that may apply depending on the employment status of the employee and the particular reason why termination of employment is being considered. 1 Note that the termination power can only be exercised by an agency head in relation to employees employed in his/her agency. This includes employees who normally are employed in another agency but who are currently employed in the agency head s agency on the basis of a temporary movement agreement for a specified period made under section 26 of the PS Act, but does not include employees who normally belong to the agency but are on temporary movement to another APS agency for a specified period under a section 26 agreement. 2

6 1.1.1 Ongoing APS employees Subsection 29(2) of the PS Act requires that, for ongoing APS employees, the notice of termination to the employee must specify the ground or grounds for termination, with section 29(3) setting out the only grounds that can be relied on for terminating the employment of an ongoing employee. These grounds are as follows: a. the employee is excess to the requirements of the agency see 2.3 of this guide b. the employee lacks, or has lost, an essential qualification for performing his or her duties see 2.4 c. non-performance, or unsatisfactory performance, of duties see 2.5 d. inability to perform duties because of physical or mental incapacity see 2.6 e. failure to satisfactorily complete an entry-level training course see 2.7 f. failure to meet a condition of engagement imposed under section 22(6) of the PS Act see 2.8 g. breach of the Code of Conduct see 2.9 h. any other ground prescribed by the Public Service Regulations no other grounds have been prescribed as at January A decision to terminate the employment of an ongoing APS employee (including the grounds for termination) must be notified in the APS Employment Gazette (PS Regulation 3.12). Further guidance related to the termination of employment of ongoing APS employees including information on the grounds of termination available under section 29 of the PS Act is provided at Part two of this guide Non-ongoing APS employees Where a person is engaged as a non-ongoing APS employee for a specified term, a specified task, or on an irregular or intermittent basis where there is a specified end date, the employment ceases at the end of the period or completion of the task and the person is not regarded as having their employment terminated at the initiative of the employer for the purposes of the FW Act. However, where it is proposed to terminate the employment of a non-ongoing APS employee before the normal expiration of the period of engagement, subsection 29(4) of the PS Act makes provision for regulations to prescribe grounds or procedures applicable to the termination of a non-ongoing APS employee, although section 29(5) also makes it clear that this provision does not, by implication, limit the grounds for terminating employment. Regulation 3.11 of the PS Regulations identifies procedures applicable to the early termination of the engagement of a non-ongoing APS employee, namely that: where an industrial or other instrument setting terms and conditions of employment for an APS employee sets out procedures that apply to the termination of employment of a non-ongoing APS employee, then those procedures apply to the termination; and where it is proposed to terminate the employment of a non-ongoing APS employee on the ground that the employee has breached the APS Code of Conduct, then the finding of breach of the Code must have been made in accordance with the agency s procedures established under section 15(3) of the PS Act. See Part three for further guidance on the termination of employment of a non-ongoing APS employee. 3

7 1.1.3 Additional requirements relating to Senior Executive Service employees For Senior Executive Service (SES) employees, there are certain additional requirements that must be satisfied before employment can be terminated. Clause 6.8 of the Directions requires that an assessment be made, having due regard to procedural fairness, that the termination is justified on the basis of one or more of the grounds mentioned in section 29(3) of the Act; and that the employee be provided with full information about other employment in the agency that the agency head considers could be made available to the employee. In addition, under section 38 of the PS Act, an agency head cannot issue a notice of termination to an SES employee unless the Public Service Commissioner has issued a certificate stating that all relevant requirements of the Directions have been satisfied in respect of the proposed termination and that the Commissioner is of the opinion that the termination is in the public interest. There are also specific provisions set out in section 37 of the PS Act and related Directions which give agency heads the power to offer an ongoing SES employee the opportunity to retire with an incentive. Where an SES employee retires with an incentive the employee is taken for all purposes to have been compulsorily retired from the APS. More detailed information on SES staffing arrangements, including termination and retirement with an incentive payment, is available at Review of termination of employment decisions There is no right of appeal or review under the PS Act or the PS Regulations in relation to a decision to terminate the employment of an ongoing or non-ongoing APS employee (apart from a right under PS Regulation 7.2 to request investigation of the former employee's separation entitlements). However, the FW Act has rules and entitlements that apply to termination of employment, including minimum periods of notice, protections against unfair dismissal and dismissal in breach of the General Protections provisions of that Act see 1.2 below. In addition to the remedies available under the FW Act, APS employees may also be able to apply for judicial review of termination decisions on the ground of failure to comply with the requirements of administrative law Reduction in classification It should be noted that section 23(4) of the PS Act sets out a range of grounds under which an employee s classification can be reduced without their consent. The list of grounds includes a sanction for a breach of the Code of Conduct; being excess to requirements at the higher classification; lacking, or losing, an essential qualification; non-performance, or unsatisfactory performance, of duties at the higher classification; and inability to perform duties at the higher classification because of physical or mental incapacity. There is considerable overlap between these grounds and those specified in section 29(3) of the PS Act in relation to termination of employment. As part of the decision making process to determine whether an employee s employment should be terminated, an agency head may wish to consider a range of options, including 4

8 whether, in the particular circumstances of the case, reduction in classification may provide a more appropriate outcome than termination of employment Fair Work Act The FW Act contains a number of provisions that are relevant to termination of employment, including in the General Protections and Unfair Dismissal provisions see below. In addition, the National Employment Standards (NES), which are set out in the FW Act, establish minimum entitlements for notice of termination and redundancy pay which will apply to certain APS termination of employment decisions. Further information on the redundancy pay component of the NES as it applies to the termination of employment of an ongoing APS employee is set out in Part 2.3 dealing with termination where an employee is excess to the requirements of the agency, while Part 3.4 contains information on the circumstances where a non-ongoing APS employee may be entitled to an NES redundancy payment on termination of employment. Note that the unlawful termination provisions of the FW Act are not relevant to APS employees as all APS employees will be covered by the General Protections provisions in Part 3-1 of the FW Act. Therefore they would not be able to bring an unlawful termination claim (see section 723 of the FW Act) Unfair dismissal Part 3-2 of the FW Act sets out when a person may be entitled to a remedy for unfair dismissal. Unfair dismissal is where a person is dismissed from his/her employment and the dismissal is found to be harsh, unjust or unreasonable and is not a case of genuine redundancy. Further guidance related to the application of the unfair dismissal provisions of the FW Act to termination of employment of APS employees is available at Appendix A Notice of termination Under section 117 of the FW Act, an employer must provide an employee with a minimum period of notice, or payment in lieu of notice, before termination. The minimum notice period is as follows: Period of continuous service Not more than 1 year More than 1 year, but not more than 3 years More than 3 years, but not more than 5 years More than 5 years Notice period* 1 week 2 weeks 3 weeks 4 weeks * Note that under the FW Act, the relevant notice period increases by 1 week if the employee is over 45 years old and has completed at least 2 years continuous service with the employer. Where payment in lieu of notice is made, the employee is entitled to receive payment of at least the amount the employer would have been liable to pay to the employee at the full rate of pay for the hours the employee 2 Note that individual agency arrangements may require consideration of reduction in classification as an alternative to termination in certain circumstances. 5

9 would have worked had the employment continued until the end of the minimum period of notice. The payment is separate to any entitlement to redundancy pay that the employee may have. Section 123 of the FW Act sets out certain exceptions to the requirement to pay notice, including where an employee s employment is terminated for serious misconduct. Further guidance related to the application of the notice of termination provisions of the FW Act to the termination of employment of APS employees is available at Appendix A and advice on the amounts to be included when calculating payment in lieu of notice is at Appendix C Payment of accrued entitlements Under section 90 of the FW Act, where an employee s period of employment ends and the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave. In addition, the Long Service Leave (Commonwealth Employees) Act 1976 sets out the circumstances in which employees will be entitled to payment in lieu of long service leave on termination of employment Notifying Centrelink and employee associations The FW Act obliges employers to notify Centrelink and relevant unions where the employer decides to dismiss 15 or more employees for reasons of an economic, technological, structural or similar nature. This obligation will usually only arise in a redundancy situation. Further guidance on the provisions of the FW Act setting out the obligations on employers to notify Centrelink and registered employee associations is set out at Part two (in relation to the termination of an ongoing APS employee), and Part three (in relation to the termination of a non-ongoing APS employee) General protections Part 3-1 of the FW Act contains the General Protections provisions. Among other things, these provisions protect employees from adverse action (e.g. dismissal, or injuring the employee in his or her employment) taken by their employer because the employee has or exercises a workplace right or participates in industrial activities. Workplace rights are broadly described as employment entitlements and the freedom to exercise and enforce those entitlements. An example of a workplace right is an employee s right to be absent from work during parental leave. Engaging in industrial activities encompasses the freedom to be or not be a member of an industrial association and to participate in lawful industrial activities (e.g. the employee takes part in industrial action). The General Protections provisions also contain a range of other miscellaneous protections. For example: section 351 of the FW Act prohibits an employer from taking adverse action against an employee for a discriminatory reason (e.g. race, sex or disability); section 352 of the FW Act prohibits an employer from dismissing an employee because they are temporarily absent from work due to illness or injury of a kind prescribed by the Fair Work Regulations (FW Regulations). Further guidance related to the application of the General Protections provisions of the FW Act to termination of employment of APS employees is available at Appendix A. 6

10 1.3 Other relevant Commonwealth laws Employment decisions made under the PS Act, including termination decisions, are generally required to be made in accordance with the requirements of administrative law including the Administrative Decisions (Judicial Review) Act Each termination decision made under the PS Act must comply with the usual requirements imposed by administrative law, including: natural justice is observed (sometimes referred to as 'procedural fairness') any requirements of law are observed the person making the decision is properly authorised there is evidence to justify the decision only relevant considerations are taken into account the decision has regard to the merits of the particular case the action does not otherwise constitute an abuse of the power to make the decision. The Age Discrimination Act 2004, the Disability Discrimination Act 1992, the Racial Discrimination Act 1975 and the Sex Discrimination Act 1984 may also be relevant when considering termination action. 1.4 Industrial instruments An agency head should have regard to the provisions of any relevant workplace arrangement (i.e. an award, an enterprise agreement, an Australian Workplace Agreement, a determination under section 24(1) of the PS Act or contract of employment) setting terms and conditions for agency employees which contain procedures to be followed before terminating an employee's employment under section 29 of the PS Act. For example, it is Government policy that APS workplace arrangements must include compulsory redeployment, reduction and retrenchment provisions for the management of excess staff. Many such instruments may also set out procedures for managing underperformance cases. A workplace arrangement cannot override statutory obligations or remedies relating to termination of employment under the FW Act or the PS Act. 1.5 Superannuation This guide does not generally deal with superannuation issues relating to termination which are the responsibility of the Department of Finance and Deregulation and ComSuper. An exception is in relation to termination on medical grounds under section 29(3)(d) of the PS Act where there are some specific limitations set out in superannuation legislation on an agency head s power to terminate employment in these circumstances. Further information is contained in Part 2.6 dealing with termination on the ground of inability to perform duties because of physical or mental incapacity. 7

11 Part two Terminating the employment of an ongoing APS employee The main points and considerations applying to the termination of employment of an ongoing Australian Public Service (APS) employee are as follows: Termination of an ongoing APS employee must comply with the relevant provisions of the Public Service Act 1999 (PS Act) and be consistent with the requirement to uphold the APS Values. Termination decisions must comply with the relevant provisions of the Fair Work Act 2009 (FW Act), the Age Discrimination Act 2004, the Disability Discrimination Act 1992, the Racial Discrimination Act 1975 and the Sex Discrimination Act 1984, and with relevant requirements of administrative law. 2.1 Public Service Act requirements Termination of employment of APS employees occurs under section 29 of the PS Act: For Senior Executive Service (SES) employees, section 38 of the PS Act provides that an agency head cannot issue a notice of termination under section 29 to an SES employee unless the Public Service Commissioner has issued a certificate stating that all relevant requirements of the Public Service Commissioner s Directions 1999 (the Directions) have been satisfied in respect of the proposed termination and that the Commissioner is of the opinion that the termination is in the public interest. There are also separate incentive to retire provisions that operate in relation to ongoing SES employees (section 37 of the PS Act and clause 6.7 of the Directions). Further information on SES incentive to retire arrangements is available at Notice of termination must be in writing (section 29(1)). The ground or grounds must be specified in the written notice of termination (section 29(2)). Termination can only be on one or more of the grounds spelt out in section 29(3) of the PS Act. Termination for a breach of the APS Code of Conduct may only be imposed where an agency head has determined a breach has occurred in accordance with the procedures established under section 15(3) of the PS Act. There are certain limitations in superannuation legislation on an agency head s power to terminate the employment of an ongoing APS employee on the grounds of inability to perform duties because of physical or mental incapacity. Any relevant procedures and requirements set out in workplace arrangements applicable to the employee should be complied with before the employee s employment is terminated. The agency must notify in the APS Employment Gazette the decision to terminate the employment, and the grounds for termination, of the employee (Public Service (PS) Regulation 3.12). There is no right of appeal or review under the PS Act or the Regulations in relation to a decision to terminate the employment of an ongoing APS employee (apart from a right under PS Regulation 7.2 for a former employee to request an investigation of their separation entitlements). However, general principles of administrative law apply to termination decisions under section 29 of the PS Act, meaning review of the 8

12 process by the Courts (generally the Federal Court) may be available depending on the circumstances of the decision Grounds for termination under Public Service Act Detailed information relating to the specific grounds for termination of employment of an ongoing APS employee as set out in section 29 of the PS Act can be found at the following parts of this guide: Termination where the employee is excess to the requirements of the agency part 2.3 the employee lacks, or has lost, an essential qualification for performing his or her duties part 2.4 non-performance, or unsatisfactory performance, of duties part 2.5 inability to perform duties because of physical or mental incapacity part 2.6 failure to satisfactorily complete an entry-level training course part 2.7 failure to meet a condition of engagement imposed under section 22(6) of the PS Act part 2.8 breach of the Code of Conduct part Fair Work Act provisions A person who was employed as an ongoing APS employee may be able to seek relief in relation to the termination of their APS employment in a number of forums, including under the provisions of the FW Act. For example, an ongoing APS employee may be able to make an unfair dismissal application to Fair Work Australia (FWA) on the grounds that the termination of their employment was harsh, unjust or unreasonable (see part 3-2 of the FW Act). In addition, a dismissed employee who believes that they have been dismissed in contravention of the General Protections provisions of the FW Act (e.g. because of the exercise of their workplace rights, participation in industrial activity or for a discriminatory reason) can apply to FWA for relief (see part 3-1 of the FW Act). The FW Act also contains provisions setting out the obligations on employers to notify Centrelink and registered employee associations where the employer proposes to terminate the employment of 15 or more employees for reasons of an economic, technological, structural or similar nature (see sections 530 and 531 of the FW Act). Subject to limited exceptions, an ongoing APS employee needs to be given notice of termination or payment instead of notice at least equal to the amount as set out in section 117 of the FW Act. Higher amounts may be provided under the APS Award or enterprise agreement or other workplace arrangement that applies to the employee. Such notice or payment instead of notice does not, however, have to be provided in cases of serious misconduct (this term is defined in regulation 1.07 of the FW Regulations). Agencies will need to determine on a case by case basis whether the conduct of an employee falls within this definition of serious misconduct in the FW Regulations and therefore whether the employee is entitled to notice of termination, or payment in lieu. 9

13 However, this does not mean that APS employees can have their employment terminated on the spot for serious misconduct. Agencies will need to follow their established procedures for determining whether an employee has breached the APS Code of Conduct, and termination of employment with or without notice on the ground of misconduct can only occur at the end of a properly conducted misconduct process. The FW Act also includes provisions relating to redundancy pay in certain circumstances as well as providing an entitlement to the payment of unused annual leave entitlements when an employee s employment ends. 10

14 2.3 Specific grounds for termination excess to requirements (s.29(3)(a)) Under section 29(3)(a) of the Public Service Act 1999 (PS Act), an agency head may terminate the employment of an ongoing Australian Public Service (APS) employee who is excess 3 to the requirements of that agency. The PS Act also includes a provision enabling an agency head to reduce the classification of an employee in their agency (without the employee s consent) on the grounds of being excess to the requirements of the agency. Also relevant are specific incentive to retire provisions which apply to Senior Executive Service (SES) employees only. Further information on the management of excess SES employees is available at Management of excess staff situations Consistent with the devolved employment framework operating in the APS, downsizing exercises are conducted by individual agencies within the parameters of Government policies, their own workplace arrangements and budgets. Subject to the terms of any agency-specific enterprise agreement, agency heads have some discretion to decide how to manage an excess staff situation. There are a range of options available in managing changing workforce requirements for example redeployment within an agency or elsewhere within the APS, natural attrition, targeted offers of voluntary retrenchment and involuntary retrenchment (as a last resort). Any such process will need to be consistent with the APS Values and other relevant provisions of the PS Act (e.g. prohibition of patronage and favouritism), the Fair Work Act 2009 (FW Act) and the agency s enterprise agreement. In any excess staff situation, agencies should establish clear, objective and defensible strategies for identifying which staff are excess. Because of the range of circumstances that can arise, it is not possible to be prescriptive about the processes to be followed in each situation different processes will fit different circumstances. Whatever strategy or process is ultimately chosen, it is important that the agency maintain control of the process and should, wherever possible, seek to retain the most productive staff a decision on who will be made an offer of voluntary retrenchment is clearly a management responsibility. Voluntary retrenchment has a role in facilitating structural and functional change. However, careful management is required to avoid creating expectations of receiving a redundancy payment to separate from the agency. In addition, redundancy provisions should not be used as an alternative to rigorous performance management procedures or other administrative action. 3 Agency enterprise agreements will typically specify the circumstances in which an employee may be identified as excess. 11

15 APS redeployment policy In April 2011, the Government announced that APS redeployment arrangements were to be enhanced and would be facilitated by a new APS Redeployment Policy. The new arrangements came into effect on 23 May 2011 and are intended to operate consistently with the existing employment framework applying in APS agencies, in particular the APS Bargaining Framework and agency enterprise agreements. The APS Redeployment Policy sets out eight key principles to guide agencies when reducing staffing levels. It also introduces an APS-wide arrangement for employees who are excess and who seek redeployment across the APS. The policy builds on existing agency arrangements already in place for managing excess staff by introducing more formal processes to assist employees to seek redeployment across the APS. As part of the new arrangements, the Australian Public Service Commission has established an on-line register for excess employees to register their interest in redeployment, so that other agencies may consider them for any vacancies. APS agencies are required to review the register to identify and assess employees who may be suitable. This can occur either before advertising occurs or prior to applications closing. Further information on the operation of the APS Redeployment Policy, including operating procedures for the on-line redeployment register, is available from Australian Public Service Bargaining Framework The APS Bargaining Framework, which sets out Australian Government policy as it applies to workplace relations arrangements in APS agencies in respect of their APS employees, and its accompanying Supporting Guidance provides that: each APS agency must include provisions in their collective/enterprise agreements and other workplace instruments that provide for access to compulsory redeployment, reduction and retrenchment (RRR) arrangements for the management of excess staff; and APS agencies are not able to enhance existing redundancy arrangements (other than where required by legislation or in exceptional circumstances with the approval of the Minister for the Public Service and Integrity). The requirement to provide for compulsory RRR provisions is intended to ensure that agencies maintain the capacity to resolve excess staff situations by either: moving the employee to a suitable job at or below their substantive classification level (with or without the employee s agreement) by: assigning different duties to an employee (section 25 of the PS Act); reducing an employee s classification without their consent, where the employee is excess to requirements at the higher level (sections 23(4) & 25 of the PS Act); or terminating the employee s employment under section 29 of the PS Act with or without the employee s agreement. The Supporting Guidance to the APS Bargaining Framework sets out what is meant by existing redundancy arrangements for the purposes of the no-enhancement requirement. Agencies are able to adapt their redundancy provisions to meet their specific needs, subject to satisfying the no-enhancement test. The Supporting Guidance is located at 12

16 2.3.3 Fair Work Act In addition to the General Protections and Unfair Dismissal provisions (see Appendix A), the FW Act includes a number of other provisions that are important in considering the termination of APS employees on excess grounds. They relate to: the National Employment Standards; a genuine redundancy exemption from the application of the unfair dismissal provisions; and advising Centrelink and unions in relation to certain proposed termination decisions. National Employment Standards redundancy pay The National Employment Standards (NES) in the FW Act operate as a safety net, setting key minimum entitlements which apply to all APS employees, including in relation to redundancy pay. The NES are not able to be excluded or modified to the detriment of an employee by an enterprise agreement or a modern award or by a contract of employment. However, where permitted by the NES provisions, a modern award or enterprise agreement may modify certain NES entitlements in limited circumstances (see section 55 of the FW Act). Note that the Australian Public Service Award 1998 (APS Award 1998), which includes redundancy pay and notice of termination provisions, is not a modern award for the purposes of this provision. Under the NES, certain employees are entitled to redundancy pay when their employment is terminated by the employer because the employer no longer requires the job done by the employee to be done by anyone (except in cases of ordinary and customary turnover of labour) see section 119 of the FW Act. The amount of redundancy pay under the NES is based on an employee s length of service and provides a benefit of between 4 and 16 weeks pay (section 119 of the FW Act). Redundancy pay is payable at the employee s base rate of pay for his or her ordinary hours of work. The length of an employee s redundancy pay period will be determined by the table in section 119(2) of the FW Act. Under the NES, there is no entitlement to redundancy pay for certain types of employees including employees with less than 12 months continuous service and casual employees (see sections 121 and 123 of the FW Act). Where an agency agreement or other instrument setting terms and conditions of employment provides for redundancy entitlements which are equivalent or more beneficial to employees than the NES amount, the employee s entitlement and the NES entitlement will operate in parallel so that the employee will get the benefit of the NES entitlement and any above-nes entitlement provided for in the industrial instrument (see section 55(6) of the FW Act). For example, if the award or agreement entitlement for an employee with at least 10 years continuous service is a redundancy payment of 20 weeks, the provisions of the NES will apply, as a minimum standard, to 12 weeks of that payment. However, the employee would receive 20 weeks redundancy pay. In this regard, the normal APS severance or redundancy benefit as set out in the APS Award 1988 and replicated in agency agreements is 2 weeks pay per year of continuous Commonwealth service, with a minimum benefit of 4 weeks pay and a maximum benefit of 48 weeks pay. This provides a more generous benefit overall than that provided under the NES, although the NES is more generous than the APS arrangements for certain employees with short service. For employees with between 2 and 3 years service, the APS benefit would be between 4 and 6 weeks pay (depending on how many completed months service the person also had) while the NES guarantees at least 6 weeks pay for all persons in this category, where the NES applies; and 13

17 For persons with between 3 and 4 years service, the APS benefit would be between 6 and 8 weeks pay while the NES guarantees 7 weeks pay for all persons with this period of service, where the NES applies. Employees who fall into either of the two situations identified above who are terminated on excess grounds (in circumstances where the agency no longer requires the employee s job to be done by anyone) will be entitled to the benefits specified in the NES, notwithstanding that their agency agreement may specify a lesser entitlement and/or is silent on NES redundancy entitlements. APS agreements should be drafted to provide that the standard APS redundancy benefit available to excess APS employees on termination of employment is subject to any minimum amount the employee is entitled to under the NES. Under the APS Bargaining Framework, this will not be regarded as an enhancement of an agency s RRR entitlements. Impact of NES redundancy pay entitlement on retention arrangements Another impact of the introduction of the NES redundancy pay entitlement is that, if an excess employee has an entitlement to a NES redundancy benefit on termination of employment, that entitlement will apply regardless of whether the excess employee has, prior to termination, accessed a period of retention in employment. Many APS agreements provide retention in employment as an alternative to redundancy pay. Retention periods allows excess employees to remain in employment for specified periods (up to 13 months in some instances) while they seek to be redeployed. Where the employee is not successful in being redeployed by the end of the relevant period of retention, APS arrangements provide that termination of employment can occur with no (APS) redundancy benefit being paid. To address the issue of the introduction of the NES, the Supporting Guidance now provides that agency agreements should include offsetting arrangements which provide that the retention period will be reduced by an amount equivalent to an employee s entitlement to an NES redundancy benefit (calculated as at the employee s termination date), in circumstances where the employee receives an NES redundancy payment on termination. A number of APS agreements also provide that where there is insufficient productive work available for an excess employee during the remainder of their retention period and where there are no reasonable redeployment prospects of redeployment in the APS, the employment may be terminated and the balance of the retention period paid to the employee as a lump sum. The Supporting Guidance now provides that in these cases agreements should make it clear that that an employee will, on termination of employment, be paid a lump sum comprising: the balance of the retention period (as shortened for the NES) and this payment will be taken to include the payment in lieu of notice of termination of employment; and an additional redundancy payment equal to the amount by which the retention period was shortened due to the NES component. For agency agreements made before the introduction of the NES on 1 January 2010 which do not include these offsetting arrangements, regulation 2.02A of the Fair Work (Transitional Provisions and Consequential Amendments) Regulations 2009 provides that where an APS employee enters into a retention period, the employee will, if their employment is terminated: not receive redundancy pay under the NES where the amount paid to the employee during the retention period is greater than, or equivalent to, the amount payable under the NES; or 14

18 receive a redundancy payment equivalent to the difference between the NES entitlement and the value of the retention period where the amount payable during the retention period is less than the benefit available under the NES. Genuine redundancy exemption from unfair dismissal The FW Act includes a genuine redundancy exemption from the application of the unfair dismissal provisions of that Act. Section 389 of the FW Act provides that a person s dismissal will be a case of genuine redundancy if: the employer no longer needs the job to be done by anyone because of changes in the operational requirements of the employer s enterprise; and the employer has complied with any obligation in an applicable modern award or enterprise agreement to consult about the redundancy. It is important to note that section 389 of the FW Act goes on to provide that a person s dismissal will not be a case of genuine redundancy if it would have been reasonable in all the circumstances for the person to be redeployed within the employer s enterprise or the enterprise of an associated entity of the employer. The question of how this exemption will be applied in the APS context has not been tested. The Commonwealth is the employer of all APS employees and so the Commonwealth is the enterprise for the purposes of section 389 of the FW Act. While it is the norm for redeployment opportunities to be explored within an agency where an employee is identified as excess, it is possible that if attempts are not made to redeploy an employee both within the agency and across the APS prior to making a decision to terminate the employee s employment on excess grounds, it may be difficult for an agency to make out the genuine redundancy exemption, should the employee subsequently lodge an unfair dismissal claim 4. Ultimately, however, a decision as to whether the exemption applies will be a matter for FWA. This does not necessarily mean that a termination decision will be considered to be unfair if redeployment opportunities are not pursued prior to a termination decision being made. However, it may be the case that the termination decision is able to be reviewed by FWA. Advising Centrelink and Unions Division 2 of Part 3-6 of the FW Act deals with the obligations on employers to notify Centrelink and relevant registered employee associations if the employer decides to terminate the employment of 15 or more employees for reasons of an economic, technological, structural, or similar nature, or for reasons including such reasons. Notification needs to occur prior to the termination decision taking effect. Under this Division, an employer must not terminate the employment of an employee who fits in this category until: written notification has been provided to Centrelink (section 530); and each registered employee association that has a member who it is entitled to represent, and who is one of the 15 or more employees, is notified. Notification of the registered employee associations is only 4 Note that the APS Redeployment Policy introduced in April 2011 is designed to assist in the redeployment of excess staff across the APS. 15

19 enforceable where the employer could reasonably be expected to have known that one or more of the employees who will be dismissed as a result of the decision is a member of the registered association (section 531(2)). In addition to any consultation term under an award, enterprise agreement or industrial instrument, an employer must consult with the union(s) whose members are affected by the decision (see section 531(3) of the FW Act). Section 534 of the FW Act provides that these requirements do not apply to certain categories of employees including employees dismissed because of serious misconduct. It is also worth noting in this context that enterprise agreements are required to include a term that requires the employer to consult with employees about major workplace changes that are likely to have a significant effect on the employees (section 205) Redeployment of an excess employee - movement of an excess employee between agencies Redeployment is a cost-effective method of dealing with excess staff. It provides an opportunity to retain skills and experience, often built up over many years and at some cost to the Commonwealth, and it avoids the financial, human and other costs associated with retrenchments. The redeployment of excess staff to suitable vacancies also avoids many of the costs and delays associated with recruiting and training new staff. As noted above, there are new redeployment arrangements in operation in the APS which are designed to encourage the redeployment of excess staff. Further information is available at In addition, agency agreements and/or general policies may contain procedures for assisting with the redeployment of excess staff, including whether the agency will provide access to external providers of redeployment services. Voluntary moves Excess APS employees may be redeployed between APS agencies (at or below level) under section 26 of the PS Act. Section 26 provides that an agency head can enter into a written agreement with an employee from another agency to move to the gaining agency, and that the agreement has effect subject to its terms and according to the Public Service Regulations (PS Regulations). A decision as to whether an excess employee who agrees to move to another APS agency at a lower classification level is entitled to any income maintenance may depend on the wording of the agreements applying in the two agencies concerned. Regardless of whether there are any specific provisions in an agency s enterprise agreement, in order to facilitate the redeployment process it may be possible in certain circumstances for the losing agency to agree to continue to pay income maintenance after the person moves to another agency. Compulsory moves Section 27 of the PS Act provides the authority for an excess APS employee to be moved (at or below their classification level) to another agency, without the employee s agreement. Under this section, the Public Service Commissioner may, by direction in writing, move an excess employee to another agency, without anyone s consent. For the purposes of section 27 of the PS Act, an APS employee is an excess employee only if the agency head has notified the Public Service Commissioner in writing that the employee is excess to the requirements of the agency. 16

20 This power is expected to be used only in exceptional circumstances where the Commissioner is satisfied that it is in the interest of the APS to do so and the employee s suitability is demonstrated. As a matter of practice, the Public Service Commissioner will normally only exercise this power after consultation with the heads of the two affected agencies. Where an excess employee is moved by the Commissioner, the agency head of the gaining agency will determine the duties of the employee in the agency Restrictions on engagement of redundancy benefit recipients The Public Service Commissioner s Directions set out certain limitations on the subsequent employment in the APS of persons who have received a redundancy benefit from an APS agency or the Australian Parliamentary Service and their redundancy benefit period has not expired. For further information refer to Agency-specific arrangements Detailed provisions concerning the management of non-ses excess staff are typically set out in agency enterprise agreements and/or agency policies. RRR arrangements can vary between different agencies, but in broad terms the more common arrangements are as follows: a definition of the circumstances in which an employee may be considered excess this is normally expressed in the following terms: the employee is included in a class of employees employed in the agency, which class comprises a greater number of employees than is necessary for the efficient and economical working of the agency; the services of the employee cannot be effectively used because of technological or other changes in the work methods of the agency or (structural or other) changes in the nature, extent or organisation of the functions of the agency; or the duties usually performed by the employee are to be performed at a different locality, the employee is not willing to perform duties at the locality and the agency head has determined that the provisions of this clause apply to that employee. the provisions only apply to ongoing employees who have completed their period of probation; there may be a commitment to an initial discussion/consultation period as well as a consideration period for employees to consider their options (up to 4 weeks for each); an employee is identified as excess (this sets in train the formal procedures); an excess employee generally has two options: i. Accept an offer of voluntary retrenchment (a once-only offer) with termination of employment with a redundancy benefit within a reasonably short timeframe (although allowance is made for a reasonable consultation process and for employees to consider their options). The standard rate for the redundancy benefit in the APS is 2 weeks pay per year of continuous Commonwealth service with a minimum of 4 weeks and a maximum of 48 weeks pay. This amount is separate from other benefits a person may be entitled to on separation from the APS including notice (or payment in lieu of notice), as well as payment for any annual leave or long service leave entitlement. In addition, staff may, depending on their age and method of termination, also be able to access superannuation benefits. OR 17

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